Charity in U.S. on rise, but wealthy still cautious

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Charity staged a bit of a comeback last year, but giving by the wealthiest Americans is still sharply lower than during the stock market bubble years, a new study asserts.

Average donations reported by households with $5 million or more in assets, excluding primary homes, decreased by 70 percent, to $180,000, during 2002-2004, according to Spectrem Group, a market research and consulting firm. That compares with an average of $600,000 for 1998-2000, the firm said.

The latest period included a rebound in major stock market indexes and a sharp increase in the number of households worth more than $5 million last year, but wealthy donors still don't feel financially comfortable enough to give at previous levels, Spectrem officials said.

"A cautious attitude about giving is still prevalent," said Catherine McBreen, managing director for Chicago-based Spectrem. "Even though their bottom line is better, people don't feel it yet. They still don't feel like they're going to recover" from the market downturn that began in 2000, she said.

Some philanthropy experts don't necessarily see such a sharp drop-off and believe that any decline can be explained by a lower average net worth in the wealthy class compared with the bubble era. But McBreen sees the rise in the number of American millionaires as evidence that household net worth is rebounding nicely.

Spectrem estimates that 740,000 U.S. households had a net worth of at least $5 million last year, a gain of 200,000 over 2003.

Individual giving levels vary as large numbers of new households enter the category, she said. Millionaires under age 50, for example, tend to donate their time to pet causes, frequently reducing the amount of dollars given, she said.

Among the merely affluent, those with at least $500,000 in non-home assets, average donations totaled $7,748, or 6 percent of income, Spectrem reported. The super rich, those with $25 million or more, gave nearly 8 percent of income. It's important to note that those numbers are self-reported.

Meanwhile, overall charitable giving rose an estimated 5 percent, to $248.5 billion, last year, a 2.3 percent inflation-adjusted increase that was significantly above the gains of the previous few years.

"In the last year or so, there's been a fair amount of recovery" from the slowdowns that occurred after the stock bubble burst and the events of Sept. 11, 2001, said Hank Goldstein, chairman of the Giving USA Foundation, which produces the overall giving report.

Goldstein and other philanthropic experts say they have not noticed a drop-off in giving by a particular income group.

"In fact, the very wealthy are more insulated from the short-term ups and downs of the market," said Daniel Borochoff, president of the American Institute of Philanthropy.

Philanthropy experts also point out that the average net worth of wealthy donors could be substantially lower than in bubble-era days, even with more households in the category.

But Spectrem's data seem to correspond with a 2004 analysis of Internal Revenue Service figures that showed high-asset filers give less.

That study, by a San Francisco research organization called NewTithing Group, found that if taxpayers with assets of $1.7 million to $46 million in 2001 gave at percentage rates comparable to more average Americans, total giving would have been 23 percent higher that year.

Pointing fingers at income groups that are giving less is a delicate issue for philanthropy officials, but describing what has happened in giving in recent years is less contentious.

"The bubble that broke, and 9/11, put a pall on things for quite a while," Goldstein said.

The biblical standard for tithing, 10 percent, is rarely adhered to. Total giving as a percentage of the nation's gross domestic product has hovered for years at roughly 2 percent, philanthropy experts said.